POST FALLS, Idaho—July 16,
2010 - JayHawk Energy, Inc. (OTCBB: JYHW) would like to
provide an update on its recent drilling activities on its Crosby,
North Dakota acreage as well as developments on its Kansas shallow
gas holdings.
Both wells drilled in the Crosby, North Dakota Madison formation
oil play of the Williston Basin were cased and placed on production
in April. While the Jenks #1 well initially produced only water,
a follow-up workover was successful in shutting off the water zone
and returned the well to oil production. Both wells are producing
at lower than expected fluid volumes, which has translated into lower
oil production than anticipated. The Company is considering fracturing
one or both wells in order to stimulate increased flow rates.
JayHawk
is currently evaluating follow-up locations for future development
drilling on its nearly 15,000 acres in the Crosby area. In order
to increase efficiencies in operations, the Company is planning
to consolidate the seven single well batteries currently utilized
for
processing into a single production battery that will service multiple
wells. This change will reduce the costs of operating multiple
wells. Once the consolidation is completed, the Company plans to
sell-off
equipment identified as excess and no longer needed for production.
In light of the recent “firming up” of natural gas prices,
the Company is re-examining the potential for increased production
from its shallow gas acreage located in Kansas. Our operating partner
has begun the field work necessary to enhance productivity of the
existing wells and JayHawk has performed the necessary upgrades to
the gas gathering system to alleviate bottlenecking on its pipeline.
These changes should stabilize production rates going forward, and
may allow the Company to increase production through improving existing
well flow rates and the selective drilling of new wells. Any future
production enhancements will likely be funded through operating revenues
and/or the exercise, by our operating partner, of their option to
acquire an additional forty-two and one-half percent (42.5%) interest
in our Kansas holdings. That option expires in late September of
this year.
The Company is also looking at the potential acquisition of oil
production properties in Kansas. If the Company is successful in
increasing gas production from its Kansas holdings, the combination
of both oil and gas production will create a secondary core production
area for the Company.
In summary, the Company is looking toward enhancing production from
its existing wells in North Dakota as well as achieving greater efficiencies
of operations in this project. JayHawk is also re-examining its gas
portfolio in Kansas and looking to further exploit its gas resources,
jointly with its partner, and augmenting that production with an
acquisition of a producing oil property in Kansas as well.
To be placed on our master email list and receive future press releases, progress reports and developments, please send an email to jayhawk@grosscapital.com or contact Gross Capital, Inc. at (361) 949 – 4999.
Investor Relations Contact
Barry Gross of Gross Capital, Inc.
www.grosscapital.com
E-Mail: jayhawk@grosscapital.com
Telephone: 1-361-949-4999
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About JayHawk Energy
JayHawk Energy, Inc. is a managed risk, oil and gas exploration/exploitation, development and production company with activities focused on two major projects in the Cherokee Basin, Kansas and the Williston Basin, North Dakota. For more information please visit www.jayhawkenergy.com.
Cautionary Note to U.S. Investors --
The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as probable, possible and potential, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. Examples of such disclosures would be statements regarding “probable,” “possible,” or “recoverable” reserves among others.
Management hopes these transactions will bring additional value to the shareholders of JayHawk Energy. There is no guarantee that the projects that JayHawk has recently acquired will increase the value of its shares of common stock, or that JayHawk will acquire rights to explore and operate any other such projects, or that in the event that it acquires rights to explore and operate other such projects, that these actions will be successful or increase the value of JayHawk’s common stock.
This press release may contain forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. There are many factors that could cause our expectations and beliefs about our plans to acquire additional exploration or production properties, our plans to drill or our drilling results to fail to materialize: competition for new acquisitions, availability of capital, unfavorable geologic conditions, the complexity of coal bed methane exploration and production, and prevailing prices for natural gas and general regional economic conditions. JayHawk assumes no obligation to update the information contained in this press release.
